Van Lanschot...ECBC Covered Bond Label Investor Reporting through National Transparency Template...
Transcript of Van Lanschot...ECBC Covered Bond Label Investor Reporting through National Transparency Template...
Conditional Pass-Through Covered Bond Programme
April 2015
Van Lanschot
Disclaimer
1
This presentation (“Presentation”) is provided for information purposes only and does not constitute, or form part of, any offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of, or any solicitation of any offer to underwrite, subscribe for or otherwise acquire or dispose of, any debt or other securities (“Securities”) of F. van Lanschot Bankiers N.V. and/or any of its affiliates (“Van Lanschot”) and is not intended to provide the basis for any credit or any other third party evaluation of Securities. If any such offer or invitation is made, it will be done so pursuant to separate and distinct offering materials (the "Offering Materials") and any decision to purchase or subscribe for any Securities pursuant to such offer or invitation should be made solely on the basis of such Offering Materials and not on the basis of the Presentation. No offering of Securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, (the “Securities Act”) or an exemption there from.
The Presentation should not be considered as a recommendation that any investor should subscribe for or purchase any Securities. Any person who subsequently acquires Securities must rely solely on the final Offering Materials published in connection with such Securities, on the basis of which alone purchases of or subscription for such Securities should be made. In particular, investors should pay special attention to any sections of the final Offering Materials describing any risk factors. The merits or suitability of any Securities or any transaction described in the Presentation to a particular person’s situation should be independently determined by such person. Any such determination should involve, inter alia, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of the Securities or such transaction.
Any investments referred to herein may involve significant risk, are not necessarily available in all jurisdictions, may be illiquid and may not be suitable for all investors. The value of, or income from, any investments referred to herein may fluctuate and/or be affected by changes in exchange rates. Past performance is not indicative of future results. Investors should make their own investigations and investment decisions without relying on this Presentation. Only investors with sufficient knowledge and experience in financial matters to evaluate the merits and risks should consider an investment in any issuer or market discussed herein and other persons should not take any action on the basis of this Presentation.
The Presentation may contain projections and forward-looking statements. Any such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause Van Lanschot’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Any such forward-looking statements will be based on numerous assumptions regarding Van Lanschot’s present and future strategies and the environment in which Van Lanschot will operate in the future. Further, any forward-looking statements will be based upon assumptions of future events which may not prove to be accurate. Any such forward-looking statements in the Presentation will speak only as at the date of the Presentation and Van Lanschot assumes no obligation to update or provide any additional information in relation to such forward-looking statements. The financial data regarding forward-looking statements concerning future events included in this presentation have not been audited.
The Presentation is only intended for the use of the original recipient. The Presentation must not be reproduced, redistributed or passed on to any other person or published, in whole or in part, for anypurpose without the prior written consent of Van Lanschot. The Presentation is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or usewould be contrary to local law or regulation. Van Lanschot expressly disclaims any and all liability for any representations (whether express or implied) contained in, or any omissions from, this Presentation or any other written or oral communications transmitted to the recipient thereof. Van Lanschot expressly disclaims any and all liability which may be based on such information, errors therein or omissions therefrom. The information in this Presentation may become unreliable because of subsequent market conditions, economic and tax circumstances, new legal developments or for other reasons. Van Lanschot disclaims any intent or obligation to update these statements. This Presentation contains certain tables and other statistical analyses (the "Statistical Information") which have been prepared in reliance on information provided by Van Lanschot. Numerous assumptions have been used in preparing the Statistical Information, which may or may not be reflected in this Presentation or be suitable for the circumstances of any particular recipient. As such, no assurance can be given as to the Statistical Information's accuracy, appropriateness or completeness in any particular context, or as to whether the Statistical Information and/or the assumptions upon which they are based reflect present market conditions or future market performance. The Statistical Information should not be construed as either projections or predictions or as legal, tax, financial, investment or accounting advice. The average life of or the potential yields on any Security cannot be predicted, because the actual rate of repayment on the underlying assets, as well as a number of other relevant factors, cannot be determined. No assurance can be given that the assumptions on which the possible average lives of or yields on the Securities are made will prove to be realistic. Therefore information about possible average lives of, or yields on, the Securities must be viewed with considerable caution.The managers and their respective affiliates trade on their own account and may from time to time hold or act as market makers in securities mentioned in this Presentation, or may act as advisors, brokers or commercial / investment bankers to persons mentioned in this Presentation. Please note that no manager makes any warranty, expressed or implied, as to the accuracy or completeness of the information and opinions herein. All recipients of this Presentation are advised to seek independent professional advice as to the suitability of any products and to their tax, accounting, legal or regulatory implications. This material is made available by the managers to the recipient, on a confidential basis and for information purposes only. It is prohibited to use the material for any other purpose.
Van Lanschot Conditional Pass-Through Covered Bond Programme
Executive summary – Covered Bond Programme
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Executive summary
Robust Programme Structure Favourable Regulatory Treatment
Industry Compliance Headlines of the pool at 28-02-2015
Dutch Law based, registration with Dutch Central Bank
AAA / AAA rated by S&P and Fitch
Significant de-linkage from rating of the Issuer
Contractually committed minimum OC of 15%
True sale of the assets with live cash flows as from the start
High quality cover pool of Dutch residential mortgage loans
Fully originated and serviced by Van Lanschot
UCITS compliant
CRR Article 129 compliant
LCR eligible (level 1)
ECB CBPP3 eligible
Exempt from Bail-in
Expected to be ECB repo eligible
Solvency II compliant
Net principal balance
Weighted average seasoning (in years)
Weigthed average CLTIMV
Weigthed average CLTOMV
Average principal balance (borrower)
Fixed rate
Floating rate
ECBC Covered Bond Label
Investor Reporting through National Transparency Template (NTT)
Member of the Dutch Association of Covered Bond Issuers (DACB)
€ 653,668,288
10.25
79.36%
71.39%
€ 407,269
€ 520,261,685
€ 133,406,604
Van Lanschot Conditional Pass-Through Covered Bond Programme
Executive summary – Van Lanschot
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* 2014 Return on Common Equity Tier I is based on net profit excluding the one-off gain from pension scheme change
Executive summary
Van Lanschot’s profile Solid performance on all key financials
Mortgage portfolio Financial targets 2017
• One strategy: pure-play, independent wealth manager focusing on preservation and creation of wealth for our clients
• Two leading brands: Van Lanschot and Kempen & Co
• Three core activities: Private Banking, Asset Management and Merchant Banking
• A- / BBB+ rated by Fitch and S&P
Target
2017 2014
• Common Equity Tier I ratio > 15% 14.6%
• Return on Common Equity Tier I * 10-12% 4.0%
• Efficiency ratio 60-65% 69.8%
• Mortgages are an integral part of Van Lanschot’s service offering• High quality portfolio of prime residential mortgage loans to wealthy
private clients in the Netherlands and Belgium• Distinctive mortgage offering dedicated to clients with specific
income and/or wealth position• All residential mortgages originated and serviced by Van Lanschot• Total mortgage book € 6bn• Average net principal balance per borrower € 440,000• Low historical losses on residential mortgage loan portfolio• A dedicated Mortgage Centre is up and running since July 2014 to
accelerate production
Van Lanschot Conditional Pass-Through Covered Bond Programme
2014 2013
• Net profit € 108.7m € 33.5m
• Net profit excluding pension gain € 54.2m € 33.5m
• Dividend per share € 0.40 € 0.20
• Common Equity Tier I ratio 14.6% 13.1%
• Total Capital ratio 15.2% 13.9%
• Leverage ratio (fully loaded) 5.3% 5.1%
• Funding ratio 95.3% 81.3%
• Client assets € 57.4bn € 53.4bn
1. Van Lanschot
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Van Lanschot has chosen to be an independent wealth management firm
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Van Lanschot
Why wealth management? Our commitment
Building on our disctinctive strengths
We can build on our inherent strengths in
private and institutional wealth management by
working together for the benefit of new and
existing clients
Supported by demographics and economic
fundamentals
There is room for a high-quality, high-service,
independent wealth manager in the Benelux,
leading to an attractive business model
supported by high levels of prosperity, capital
surpluses, low growth expectations and an
ageing population
Mission
Preservation and creation of wealth for our
clients
Vision
To be the preferred wealth manager for our
domestic and international client base by
providing top-quality advice and service, and
superior risk-adjusted returns. And in doing so
attract, develop and retain the best available
talent in the market and provide an exciting,
entrepreneurial working environment
Van Lanschot Conditional Pass-Through Covered Bond Programme
Van Lanschot builds on its experience in its three core activities
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Van Lanschot
Private Banking
• Private Bank of choice for high
net-worth individuals,
entrepreneurs and family
businesses
• Specialised services for business
professionals and executives,
healthcare professionals, and
foundations and associations
• Three service concepts: Personal
Banking, Private Banking and
Private Office
Asset Management
• Specialised EU investment
management boutique
• Focus on a limited number of high
quality investment strategies in
combination with integrated
solutions for national and
international pension funds and
insurance companies
Merchant Banking
• The most relevant boutique firm
for corporates and institutional
investors based on superior
market knowledge in its niches
• Growth through increased share
of served market niches based on
leading advisory, research and
trading knowledge
Van Lanschot Conditional Pass-Through Covered Bond Programme
Mortgages form an anchor product
within Private Banking activities
Van Lanschot’s solid profile is reflected in itscreditworthiness
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Van Lanschot
Fitch Standard & Poor’s
• Long-term credit rating: A-
• Outlook long-term credit rating: Negative
• Short-term credit rating: F2
• Latest press release: 30-09-2014
• Rating has been reconfirmed since 2009
• Long-term credit rating: BBB+
• Outlook long-term credit rating: Stable
• Short-term credit rating: A-2
• Latest press release: 04-11-2014
• Outlook revised to Stable from Negative in November 2014
“Van Lanschot's good capitalisation is strongly supporting its rating... The rating incorporates the bank's established ... franchise in wealth management and merchant banking and expectation that its management will be able to execute on its strategy ... The rating is further supported by the bank's good and balanced funding profile and sound liquidity management.”(30 September 2014)
“Van Lanschot has advanced well in refocusing on pure wealth management business. We think this business model should enable the bank to strengthen its core franchise..., as well as to simplify its product offering while reducing its risk exposure and increasing its capitalization over time, in line with what we view as a relatively cautious strategy and management.” (4 November 2014)
Van Lanschot Conditional Pass-Through Covered Bond Programme
Highlights 2014 annual results
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Van Lanschot
Execution of strategy on track
Good progress in execution
• Private Banking: transformation finalized, introduction of new wealth planning advisory service
• Asset Management: global funds launched in Small-caps and Real Estate, flourishing third party distribution
• Merchant Banking: solid market share in selected niches, involved in appealing transactions, more international clients
• Corporate Banking: run-off is ahead of schedule, interest margin improving
Solid profit growth in 2014
Growth in client assets
Capital ratiosstrengthened
Net profit of € 108.7 million; proposed dividend of € 0.40 per share
• Net profit of € 54.2 million (+62%) excluding one-off gain from pension scheme change
• Income from operating activities +3%
• Operating expenses +2%
• Loan loss provision -26%
Client assets increase to € 57.4 billion (+7%)• Strong market performance• Client assets of Evi (our online service for savings and investment) grow to over € 1 billion• Inflow of discretionary mandates and savings and deposits at Private Banking • Discretionary mandates comprise 42% of Private Banking assets under management• Client assets at Asset Management grow 13%
Common Equity Tier I ratio grows to 14.6% (+1.5%-point)
• Leverage ratio (fully loaded) 5.3%
• Common Equity Tier I ratio (fully loaded) 13.4% (+2.9%-point)
• Well diversified funding profile: funding ratio of 95.3%, supported by successful wholesale market transactions
Van Lanschot Conditional Pass-Through Covered Bond Programme
Balance sheet with strong capital and funding position
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Van Lanschot
Significant capital buffer• Total equity of € 1.35 billion, of which
€ 1.19 billion in share capital and reserves
• Common Equity Tier I ratio (phase-in) 14.6%
• Leverage ratio (fully loaded) 5.3%
Low risk assets • Loan book decreased € 1.5 billion to
€ 11.0 billion in line with focus on wealth management. Loan book comprises still 64% of the balance sheet
• Investment portfolio extended with low risk European government bonds and bonds issued by financial institutions
Solid funding position• Funding profile is well diversified in
terms of instrument, source and maturity• Several capital market transactions
executed in 2014 (senior unsecured note and various medium term notes)
• Funding ratio increased to 95.3%
Balance sheet at 31-12-2014
(€ billion)
Balance sheet total = € 17.3 billion
Cash and balances with
banks
Financial
instruments
Loans and
advances*
Other
Due to banks
Customer savings
and deposits
Issued debt
securities
Other
Equity
* 55% of the Loans and Advances are mortgages
Van Lanschot Conditional Pass-Through Covered Bond Programme
Van Lanschot has various funding programmes
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CPT Covered Bond Programme RMBS Programmes
• Residential mortgage loan portfolio, fully originated and serviced by
Van Lanschot
• Conditional Pass-Through Structure
• Registered with the Dutch Central Bank
• ECBC Covered Bond Label
• Significant de-linkage from Van Lanschot rating
Bloomberg ticker: LANSNA Corp
• Residential mortgage loan portfolio, fully originated and serviced by
Van Lanschot
• Lunet RMBS 2013-I structured to be PCS and DSA compliant
• Courtine RMBS 2013-I retained by Van Lanschot for liquidity
management purposes
• The Citadel programmes were successfully established with the
objective of diversifying funding and creating eligible assets
Bloomberg ticker: LUNET Mtge / CRTIN Mtge / CITAD Mtge
Secured programmes
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Debt Issuance Programme / MTN
• € 5.0 billion programme
• Used for public wholesale funding (senior unsecured and
subordinated), and structured retail products
• Prospectus last updated on 17 April 2014
• Private placements
Bloomberg ticker: LANSNA Corp
• Euro and non-euro issues on stand-alone documentation
• Private placements
• Structured products
• Hybrid instruments
Bloomberg ticker: LANSNA Corp
Non-MTN / Specials
Unsecured programmes
Van Lanschot
Van Lanschot Conditional Pass-Through Covered Bond Programme
Successful presence in wholesale markets
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Apr-11 May-11 Aug-12 Sep-12 Oct-12 Apr-13 May-13 Aug-13Jan-11 Apr-12Jul-10
Senior unsecured, € 300 m, 5 year
Re-offering Citadel 2010-II, Class A Notes, € 750 m
Senior unsecured, € 500 m, 4 year
Senior unsecured, CHF 250 m, 3.5 year
Re-offering Citadel 2010-I, Class A Notes, € 153 m
Floored Floater, € 90 m, 10 year
Senior unsecured,€ 135 m, 7 year
• Citadel 2010-I, € 1.2 bn (€ 247 m Class A1 Notes placed, € 531 m Class A2 Notes placed)
AS
SE
T-B
AC
KE
DS
EN
IOR
UN
SE
CU
RE
D
Nov-13
Lunet 2013-I, € 1.075bn (€ 244 m Class A1 Notes placed,€ 640 m Class A2 Notes placed)
Feb-14
Senior unsecured (tap), € 200 m, 4.3 year
• Strong funding position based on a stable level of bond issuance and a regular presence in wholesale markets
• Successful in raising funds in wholesale markets every year since 2010
Mar-10
Senior unsecured, € 400 m, 3 year
• Senior unsecured, € 500 m, 3 year
• Trigger notes, € 65 m, 3 year
Van Lanschot
Van Lanschot Conditional Pass-Through Covered Bond Programme
Well diversified funding profile
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Van Lanschot
61%22%
5%8%4%
Funding mix at 31-12-2014
100% = € 17.3 billion
Client savings &
deposits
Debt securities &
subordinated loans
Interbank funding
Shareholders' equity
Other funding
• Largely ‘self funded’ with a funding ratio 95.3% at 31-12-2014• As a wealth manager, majority of funding is customer savings and
deposits• Funding mix complemented by wholesale funding • Comfortable funding diversification across maturities and instrument
types• The proceeds of the proposed issuance under the Programme are
going to be used for refinancing (redemption of Citadel 2010-I and Citadel 2010-II in Augustus 2015) and general corporate purposes
Van Lanschot Conditional Pass-Through Covered Bond Programme
0
200
400
600
800
1.000
1.200
1.400
1.600
2015 2016 2017 2018 2019 2020 2021 >2021LT Repo Perpetual Senior
Subordinated Citadel RMBS 2010-I Citadel RMBS 2010-II
Lunet RMBS 2013-I
Redemption profile at 31-12-2014(€ million)
2. Covered Bond Programme
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Programme Highlights (1/2)
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Programme Parties Overview
Issuer F. Van Lanschot Bankiers N.V. (“Van Lanschot”)
Guarantor Van Lanschot Conditional Pass-Through Covered Bond Company B.V.
Security Trustee Stichting Security Trustee Van Lanschot Conditional Pass-Through Covered Bond Company
Administrator Intertrust Administrative Services B.V.
Servicer Van Lanschot
Asset Monitor PriceWaterhouseCoopers (PwC)
CBC Account Bank Société Générale S.A.
Arrangers Van Lanschot and Rabobank
Paying Agent Citibank, N.A. London Branch
Covered Bond Programme
Conditional Pass-Trough Covered Bond Programme Characteristics
Programme Size EUR 5 billion Currency Euro
Ratings AAA / AAA (Fitch / S&P) Format Conditional Pass-Through
Contractually committed minimum OC
15% Extension Period Max. 32 years
Applicable law Dutch Law Minimum Denomination EUR 100,000 + 1,000
Van Lanschot Conditional Pass-Through Covered Bond Programme
Programme Highlights (2/2)
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Key Benefits
Dual Recourse Obligation for Van Lanschot to redeem the bond at expected maturity date
Recourse to CBC in case of default of Van Lanschot
Stable Rating Significant de-linkage from issuer rating: a downgrade of the issuer rating does not directly affect the Covered Bond rating
Regulatory Treatment
UCITS compliant CRR Article 129 compliant Expected to qualify as LCR eligible (level 1) ECB CBPP3 eligible Exempt from Bail-in Expected to be ECB repo eligible Solvency II compliant
Robust Structure External Administrator External Account Bank True sale of the assets with live
cash flows as from the start Strong and severe programme
tests
Industry Compliance ECBC Covered Bond Label Investor Reporting through National
Transparency Template (NTT) Member of the Dutch Association of
Covered Bond Issuers (DACB)
Cover Pool High quality portfolio of prime Dutch residential mortgage loans
No ABS investments in the pool All mortgage loans backed by
eligible collateral
Covered Bond Programme
Van Lanschot Conditional Pass-Through Covered Bond Programme
Conditional Pass-Through Mechanism (1/2)
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Event diagram
Issuer Event of Default
Amortisation Test
All CB’s converted to
Pass-Through
Bullet Maturity
Bullet MaturitySelective
conversion to Pass-Through
No
Yes
PositiveResult
Negativeresult
Insufficient funds at maturity
Covered Bond Programme
Van Lanschot Conditional Pass-Through Covered Bond Programme
Conditional Pass-Through Covered Bond: Features
Going-Concern • Under going-concern conditions, the Covered Bonds are bullet securities, i.e. Van Lanschot pays the coupon and principal payments
• The Asset Cover Test ensures that the Cover Pool meets the minimum OC criteria
Issuer Event of Default • In the case of a default of Van Lanschot and a Covered Bond reaches its maturity date then the covered bonds will be redeemed at their respective maturities if there are sufficient funds available in the CBC
• In the case of (1) a default of Van Lanschot and (2) a Covered Bond reaches its maturity date and (3) the CBC does not have sufficient funds to redeem the Covered Bonds and the proceeds of a partial sale of the cover pool would not be sufficient to redeem the Covered Bond then the Pass-Through mechanism is triggered (solely for the respective series)
• After a default of Van Lanschot the Amortisation Test replaces the Asset Cover Test. A breach of the Amortisation Test will result in all Covered Bonds becoming Pass-Through Covered Bonds (irrespective of their maturity date)
Conditional Pass-Through Mechanism (2/2)
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Hard bullet
Soft bulletExtension period (Max. 1 year)
CPTCB Extension period (Max. 32 years)
* Assuming all bonds in Pass-Through modus, 5% CPR, 0.4% coupon, no losses, 1.5% minimum mortgage interest rate
• In case a Covered Bond becomes Pass-Through the maturity date of that bond is extended by 32 years from the Maturity Date
• The CBC will attempt to sell a randomly selected part of the cover pool at least every six months
• Under such a sale, the outcome of the Amortisation Test is not allowed to deteriorate. This requirement (along with the general requirements of the Amortisation Test) prevents time-subordination of longer-dated covered bonds
• Repayments and excess interest from Cover Pool mortgage loans will be distributed pari passu to the Pass-Through Covered Bonds. As a result the OC is expected to increase which makes a successful sale of the mortgage loans more likely
Repayment Profile
Expected Increase OC in Pass-Through Scenario*
Orderly wind-down Cover Pool
Covered Bond Programme
Van Lanschot Conditional Pass-Through Covered Bond Programme
0%
10%
20%
30%
40%
50%
60%
0 1 2 3 4 5
Years
Van Lanschot CPTCB Structure*
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Borrowers
Cover Pool
Mortgage Principal + Mortgage Interest
Pledge of receivables
Guarantee
• A pool of Dutch prime residential mortgages is transferred to the CBC and subsequently pledged to the Security Trustee. Hence, the cover pool is segregated in the CBC
• Van Lanschot’s obligation of payments to investors on the bonds is backed by an irrevocable guarantee of the CBC
• The Asset Monitor conducts tests on the accuracy of the Asset Cover Test and Amortisation Test
CBC (Guarantor)
Van Lanschot (Issuer / Servicer)
Investors
Principal
Principal +Coupon
Security Trustee
Mortgage Principal + Mortgage Interest
Asset Monitor
Monitor ACT / Amortisation Test
Covered Bond Programme
Van Lanschot Conditional Pass-Through Covered Bond Programme
Mortgage Principal
* Simplified structure, see Prospectus for legal structure
Robust structure
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• Transaction builds on the building blocks of existing Pass-Through Covered Bond Programme
• Programme is conservatively structured with future issuance in mind
• In contrast to existing CPTCB programmes the possibility exists to use a portfolio swap comparable with hard and soft bullet programs
• The possibility to introduce a portfolio swap and the low minimum interest mortgage rate for individual mortgage loans enables issuance irrespective of interest environment
• Current Cover Pool in the programmeis a good representation of Van Lanschot’s existing and future mortgage portfolio, the Asset Percentage is expected to be stable
Conditional Pass-Through Covered Bond Programmes
Van Lanschot NIBC Unicredit (OBG2)
Country Netherlands Netherlands Italy
Legislative Yes Yes Yes
Issuer ratings (Fitch/Moody’s/S&P)
A-/NR/BBB+ BBB-/Baa3/BBB- BBB+/Baa2/BBB-
Programme ratings (Fitch/Moody’s/S&P)
AAA/NR/AAA AAA/NR/AAA AA+/NR/NR
Repayment Type Conditional Pass-Through
Conditional Pass-Through
Conditional Pass-Through
Collateral type Prime Dutch residential mortgages
Prime Dutch residential mortgages
Residential mortgages and SME mortgages
Max. Asset Percentage 90% 91% 93%
Contractually committed minimum OC
15% 15% 7.5%
Minimum Mortgage Loan Interest Rate
1.5% 3% NA
Swaps Possibility to use Portfolio swaps and/orInterest-rate swaps
Possibility to use Interest-rate swaps
No swap in place
Extension Period Max. 32 years Max. 32 years Max. 38 years
Covered Bond Programme
Van Lanschot Conditional Pass-Through Covered Bond Programme
Van Lanschot Investor Reporting
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Investor Reporting for Covered Bonds
• Van Lanschot is a member of the Dutch Association of Covered Bond issuers (DACB). The objective of the DACB is to continuously improve the quality of the Dutch covered bond product offering (See also www.dacb.nl)
• The Van Lanschot Covered Bond Programme carries the ECBC Covered Bond Label
• Investor reports will follow the (Dutch) National Transparency Template and are available via https://corporate.vanlanschot.nl/debtinvestors
Covered Bond Programme
Van Lanschot Conditional Pass-Through Covered Bond Programme
3. Mortgage portfolio
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Strong portfolio with consistently low losses
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Mortgage portfolio
• Mortgages are an anchor product of Van Lanschot
• High quality portfolio of mortgage loans to wealthy private clients in the Netherlands and Belgium
• Mortgage prepayments and redemptions exceeded new originations in recent years
• Mortgage book down by 6% in 2014 (€ 6.0 billion as of 31-12-2014 vs. € 6.5 billion as of 31-12-2013)
• Limited number of defaults and loan losses
• Traditionally low impaired ratio of 1.7% (2013: 1.7%) and high coverage ratio of 61% (2013: 62%)
• Impaired loans adequately provisioned
• Van Lanschot is applying a growth strategy for mortgage loans in 2015, (particularly for customers with a specific income or financial situation)
Traditionally limited number of defaults and loan losses
Loan book per 31-12-2014*
100 % = € 11.0 billion
* In the following part of the presentation only the Dutch portfolio will be considered
Van Lanschot Conditional Pass-Through Covered Bond Programme
53%
20%
11%
16%
Pivate Banking - Mortgages
Private Banking - Other loans
Corporate Banking - SME loans
Corporate Banking - Real estate
financing
31-12-2012 31-12-2013 31-12-2014
Impaired ratio 1.4% 1.7% 1.7%
Coverage ratio 61% 62% 61%
53%
20%
11%
16%
Private Banking - Mortgages
Private Banking - Other loans
Corporate Banking - SME loans
Corporate Banking - Real estate
financing
7%6%
13%
10%
24%
40%
1-3 years
4-5 years
6-7 years
8 years
9-10 years
>10 years
0
20
40
60
80
100
120
0
200
400
600
800
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Mortgage exposure VL portfolio Price index
Healthy vintage, geographically well distributed portfolio
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• 64% of the total mortgages exposure relates to contracts older than eight years, and therefore are less affected by house price decline
• The mortgage portfolio is well distributed throughout The Netherlands
• The three regions with highest concentration rates are:• Gooi & Vechtstreek; • The Hague & Wassenaar• ‘s-Hertogenbosch
• The mortgage portfolio is mainlyconcentrated in the regions wherehouse prices decreased relativelymoderately compared to 2008 peak
Seasoning of mortgage portfolio
Mortgage origination vs house price developments
(€ million)
Mortgage portfolio
Van Lanschot Conditional Pass-Through Covered Bond Programme
Index: 2010=100
Geographical distribution
0
2.000
4.000
6.000
8.000
10.000
12.000
0
500
1.000
1.500
2.000
2.500
<=0.5 mln 0.5 - 1 mln 1 - 1.5 mln 1.5 - 2 mln 2 - 3 mln 3 - 4 mln 4 - 5 mln > 5 mln
Exposure (LHS) Number of borrowers (RHS)
23%
35%
24%
18%
25%
34%
24%
18%
<=75% 75% - 100% 100% - 125% >125%
31-12-2013
31-12-2014
LTV’s indicate stabilisation of house prices
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• Van Lanschot’s target client base has naturally led to a mortgage portfolio with a relatively high average balance of € 440,000 (all mortgage loans are compliant with the Dutch Code of Conduct)
• 73.9% of the total exposure (by balance) and 92.9% of contracts relate to loan amounts of less than € 1 million
• Average exposure weighted CLTIFV* is 94.3% in 2014 (95.0% in 2013)
• LTV-ratio stabilises because of:• Stabilised house prices• Continuing early repayments
CLTIFV as percentage of Van Lanschot mortgage portfolio
Mortgage size
(€ million)
Mortgage portfolio
Van Lanschot Conditional Pass-Through Covered Bond Programme
* CLTIFV = Current Loan To Indexed Foreclosure Value
Proportion of interest only mortgage loans
Van Lanschot Conditional Pass-Through Covered Bond Programme 25
Mortgage portfolio
• Interest only mortgage loans trending down as a result of industry-led measures, clients’ focus on deleveraging and amended tax legislation
• Mortgage loans with a redemption profile (annuity and linear) are expected to increase (relative to interest only) going forward, due to new tax legislation as of 2013, i.e. for new mortgage loans only interest on annuity and linear mortgage loans is tax deductible
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
<2000 2000-2001 2002-2003 2004-2005 2006-2007 2008-2009 2010-2011 2012-2014
Investment
Saving
Life
Redemption
Interest Only
Repayment types in new mortgage production
0,00%
0,50%
1,00%
1,50%
2,00%
2,50%
jan-09 jul-09 jan-10 jul-10 jan-11 jul-11 jan-12 jul-12 jan-13 jul-13 jan-14 jul-14
26
• Since 2009, Van Lanschot’s 90 days+ mortgages arrears have averaged to 1.55%
• The notable recent decrease in the 30-60 days and 60-90 days arrears buckets is indicative of Van Lanschot’s proactive management of delinquent
borrowers and a tightening of overall credit and arrears management policies.
• Van Lanschot’s credit risk management department uses sophisticated Advanced-IRB models to accurately predict and provision for its mortgage
portfolio as well as to refine underwriting and servicing activities. These models have been approved by the Dutch Central Bank (DNB) and are
independently validated on a regular basis.
Arrears and credit risks are well managed
Arrears percentage of outstanding balance
90+ days
Arrears percentages by bucket (cumulative)
0,00%
1,00%
2,00%
3,00%
4,00%
5,00%
6,00%
7,00%
8,00%
jan-09 jul-09 jan-10 jul-10 jan-11 jul-11 jan-12 jul-12 jan-13 jul-13 jan-14 jul-14
0-30 days 30-60 days 60-90 days
90-120 days 120+ days
Mortgage portfolio
Van Lanschot Conditional Pass-Through Covered Bond Programme
Annex I – Cover pool
27
Pool characteristics (I/III)
28
Annex I – Cover Pool
Key pool characteristics at 28-02-2015
Principal balance € 663,725,999
Value of savings amount* € 10,057,711
Net principal balance € 653,668,288
Construction deposits € 673,999
Fixed rate € 520,261,685
Floating rate € 133,406,604
Number of borrowers 1,605
Number of loans 3,250
Average net principal balance (per borrower) € 407,270
Weighted average current interest rate (%) 3.95
Weighted average maturity (in years) 19.03
Weighted average remaining time to interest reset (in years)
2.58
Weighted average seasoning (in years) 10.25
Weighted average CLTOMV 71.39%
Weighted average CLTIMV 79.36%
Key eligibility criteria
• Each mortgage is either a Life Mortgage Loan, Investment Mortgage Loan, Linear Mortgage Loan, Annuity Mortgage Loan, Interest-only Mortgage Loan, Insurance Savings Mortgage Loan or a combination thereof
• The maximum Outstanding Principal Amount per borrower, originated before August 2011 did not exceed 125% LTV at origination
• The maximum Outstanding Principal Amount per borrower, originated in and after August 2011, did not exceed 104%. LTV at origination or if lower, the maximum amount as may be applicable under the relevant regulations at the time of origination
• First and subsequent ranking mortgages
• Only properties in the Netherlands
• All payments via direct debit
• Borrower is a private individual, resident of the Netherlands and not an employee of Van Lanschot
• Each mortgage loan is originated by the Transferor
• Each mortgage loan is denominated in euro
• Property primarily used for residential purpose
• One of the properties is occupied by the Borrower at the time of origination
Van Lanschot Conditional Pass-Through Covered Bond Programme
* Connected to the savings mortgages
0%
5%
10%
15%
20%
25%
30%
35%
<250 <500 <750 <1000 >=1000
0%
5%
10%
15%
20%
25%
30%
35%
0%
5%
10%
15%
20%
25%
<10 <20 <30 <40 <50 <60 <70 <80 <90 <100 <=110
98%
2%
Van Lanschot
C&E*
Pool characteristics (II/III)
29
Annex I – Cover Pool
Current Loan to Original Market Value Geographical Distribution
Current Loan Balance
(€1,000)
Van Lanschot Conditional Pass-Through Covered Bond Programme
*At the end of 2005 the legal merger of CenE Bankiers into Van Lanschot was fully completed
Originator
65%
15%
9%
6%3%
2%Interest Only
Life
Investment
Savings
Lineair
Annuity
Pool characteristics (III/III)
30
Annex I – Cover Pool
Product type
Time to Interest Reset Date
Van Lanschot Conditional Pass-Through Covered Bond Programme
0%
10%
20%
30%
40%
50%
<1 <2 <3 <4 <5 <6 <7 <8 <9 <10 >=10
0%
10%
20%
30%
40%
50%
60%
<5 <10 <15 <20 <25 <30 >=30
Seasoning
(in years)
0%
5%
10%
15%
20%
25%
1.5-2 2-2.5 2.5-3 3-3.5 3.5-4 4-4.5 4.5-5 5-5.5 5.5-6 6-6.5 6.5-7
Interest Rate
(%)
Annex II – Van Lanschot Mortgages
31
Van Lanschot: product offering
32
Annex II – Van Lanschot Mortgages
• Advice on financial planning and wealth management
• Focus on tailor-made advice and a high quality service level
• Mortgage loans offered to clients as part of a full-service financial solution concept. Preferable on the basis of advise but also on execution only terms
• Three types of mortgage loans offered (annuity, linear or interest-only)
• Advice based on the personal preferences and circumstances of the client: “does the mortgage loan fit the client”
• Check on income and assets: is the client able to pay the interest and redemptions, while maintaining desired standard of living
• Risk awareness: changing interest rates, declining house prices
• Scenarios and calculations based on key events in the lifecycle such as unemployment, disability and death
Origination at Van Lanschot
Van Lanschot offers private banking services to wealthy individuals and to individuals starting to build up wealth
• The origination of Private Banking and Private Office clients is done by our bankers and certified mortgage advisors of the Mortgage Centre
• The origination of Personal Banking clients is done by the bankers via telephone. The mortgage applications are handled by the certified mortgage advisor of the
Mortgage Centre
• Van Lanschot has not used intermediaries for the origination of mortgage loans since 2009. End 2014, we started to work with a limited number of carefully selected
intermediaries
• Van Lanschot always has direct contact with the client, also when the client is introduced by an intermediary
Van Lanschot Conditional Pass-Through Covered Bond Programme
Van Lanschot: underwriting (I/II)
33
Loan
Maximum Loan to Value
• Mortgage loans up to and including € 2 million: maximum 101% of market value (excluding 2% transfer tax)*
• Mortgage loans above € 2 million: maximum 100% of market value, including minimum 25% client assets at Van Lanschot
• Interest-only up to 50% of market value
Borrowercriteria
• Dutch nationality or permanent resident of the Netherlands
• Employment contract for indefinite period, in principle no temporary contracts
• Self-employed borrowers: three years of history, except for business professionals and medical practitioners
• Cohabiting (registered) or married partners are jointly and severally liable
Financial criteria
Loan to income has to be compliant with Dutch Code of Conduct and National Law. Income components for calculation:
• Fixed salary, subject to employer’s declaration and salary slip, of both borrowers taken into account
• Variable income partly taken into account under strict restrictions
• Income from client assets limited to 3% annual return
• Net rental income from other properties (after interest payments, installments and maintenance fees)
Governance
Annex II – Van Lanschot Mortgages
Dutch Code of Conduct leading
• Mortgage underwriting criteria within Van Lanschot have evolved over time in line with the Dutch Code of Conduct, National Law and general market practice. The criteria below are those currently applied
*As part of the Government reforms, as of 1 January 2013 the maximum LTV will gradually decrease from 106% with 1% per year to 100% in 2018. Please note that other repayment types are also allowed. However for those repayment types borrowers do not benefit from tax deduction.
Van Lanschot Conditional Pass-Through Covered Bond Programme
Van Lanschot: underwriting (II/II)
34
Property
• Mandatory property valuation by independent appraiser
• Full appraisal is carried out according to the requirements of the Dutch Central Bank
• Only valuation reports from qualified appraisers and valuation agents (mandatory external validation as of 1 January 2015)
• Valuation reports should not be older than 6 months
• Exception: sales contract for newly built properties
Information
• Van Lanschot is required to follow strict requirements to provide information to its borrowers
• To prevent unfavourable borrower behavior, borrowers need to have a good understanding of:
• how their mortgage will work
• what they can expect to change in the future
• what their choices are
* BKR (Credit Registration Bureau), SFH (Anti-Fraud System), VIS (Identification System), EVA (Anti-Fraud System)
Fraud &InsuranceRequirements
• Various fraud checks done (BKR, SFH, VIS, EVA, employer’s certificate)*
• Continuous contact between banker and client
• Mandatory hazard insurance based on reconstruction value
• Life insurance compulsory above 75% Loan to Market value
LoanApprovalGovernance
• Certified Mortgage Advisor: up to € 1,000,000, only for borrowers with an employment contract for indefinite period and if fully compliant with Dutch Code of Conduct and Van Lanschot’s credit policy (4 eyes principle)
• Credit Approval and Control: up to € 3 million, at three different levels (minimum 4 eyes)• Credit Risk Committee: > € 3 million, consisting of all members of the Statutory Board, Director of Credit Risk Management,
Head Credit Approval & Control and Private Banking Directors• No standard exception policy due to customer base of wealthy individuals
Annex II – Van Lanschot Mortgages
Van Lanschot Conditional Pass-Through Covered Bond Programme
Servicing during the life cycle of a mortgage loan
35
Annex II – Van Lanschot Mortgages
Application Offering Acceptance by client Registration
Payment Changes Interest reset Redemptions
• Acceptance • Processing in credit system
• Production of mortgage offer
(and possible other credit
offerings)
• Sending directly to client or
banker
• Follow-up on progress
• Acceptance processing in
credit system
• Collection of demanded
collateral
• Contacting Notary Public,
insurance companies etc.
• Registration of collateral
in credit system
• Payment of loan to Notary
Public through credit system
• Processing change requests by
clients (e.g. collateral, interest,
duration etc). Process depends
on nature of change
• Clients receive a new interest
proposal 3 months prior to
renewal date
• Partial redemptions
• Redemptions at maturity date;
6 months prior to maturity
date we inform clients about
redemption
Van Lanschot Conditional Pass-Through Covered Bond Programme
Van Lanschot: arrears management
36
Annex II – Van Lanschot Mortgages
Arrears management / Timeline
• Mortgage loans are considered in arrears if current account is overdrawn for more than one day and for an amount in excess of € 250
• All accounts which are overdrawn are monitored by a central desk at Service Center Loans, or ‘OMO’, Overdraft Monitoring Office
• Account managers have to make an activity plan on accounts overdrawn in excess of € 2,500. The OMO keeps track on progress every week
• Account Managers and OMO’s are supported by the Overstanden Desk, or Overdrafts Desk, which supplies data about overdrafts to account
managers and OMO’s and takes care of the written follow-up on overdrafts in accordance with the schedule below
Private Banking clientsDay 0: non-payment of borrower
Day 30: a reminder letter is sent to the client with request to settle the overdrawn amount
Day 45: a second letter is sent
Day 90: the recovery department is informed about the default status
Personal Banking clientsDay 0: non-payment of borrower
Day 7: a reminder letter is sent to the client with request to settle the overdrawn amount
Day 30: a second letter is sent
Day 90: the recovery department is informed about the default status
Van Lanschot Conditional Pass-Through Covered Bond Programme
Van Lanschot: restructuring approach
37
Annex II – Van Lanschot Mortgages
Restructuring
Recovery / foreclosure
• If the client is in financial distress or 90 days after an overdraft has become material, the client is said to be in default. At that moment the client is
handed over to the Recovery Division
• The Recovery Division performs a check of banking position / security check:
- Mortgage
- Stock depositories
- Guarantee / Pledges (e.g. life insurance)
• The account manager of the recovery team will contact the client and will assess the client’s position with Van Lanschot, both in terms of value and
relationship
• Situation is considered to be curable: first tailor-made recovery plan
• Situation is considered not to be curable: tailor-made rectification plan and vigorous follow-up
• There are no specific timelines for foreclosure, this is client-specific and is on case basis
• If a sale of the property is necessary, Van Lanschot always tries to convince the client to sell the property on a voluntary basis
• If the client does not agree to a voluntary sale, the sale will be forced via public auction
• Van Lanschot is always present at auctions, either through an employee or a representative
• Van Lanschot has a vehicle available with which it may buy a property in an auction
Van Lanschot Conditional Pass-Through Covered Bond Programme
Annex III – Covered Bond Programme
38
Minimum Overcollateralisation
39
• The nominal value of the cover assets excluding any defaulted receivables must always be at least equal to 115% of the outstanding bonds under the program
Contractually committed minimum OC of 15%
Adjusted Aggregate Asset Amount >= Outstanding
Bonds
• The nominal value of the cover assets must always be at least equal to 105% of the nominal value of the outstanding bonds under the program
Minimum Regulatory OC: 5%
Asset CoverTest
• The Asset Cover Test will account for all risks by the following formula:
• Adjusted Aggregate Asset Amount = A + B + C - Z
• The calculation of ‘A’ includes (among others) the following parameters:
• 90% asset percentage
• 80% CLTIMV cut-off
• Deduction of savings set-off risk
• Deduction of other claims
• Deduction of defaulted receivables
• ‘B’ and ‘C’ represent cash and substitution assets
• ‘Z’ represents the ‘Interest Reserve Required Amount’
Van Lanschot Conditional Pass-Through Covered Bond Programme
Try to sell a portion of the mortgage portfolio without deteriorating the Amortisation Test for the other CB’s
Pass-Through Mechanism
40
Annex III – Covered Bond Programme
Default of Van Lanschot
Repayment of the CB at the Maturity Date
No
CBC needs to pay Covered Bond holders
Yes
Every month
All series of CB will become Pass-Through CBNo
Relevant CB will become Pass-Through CB
Yes
No
Yes
No
Yes
No
Yes
CBC will try to sell the mortgage portfolio to redeem all Pass-Through CB
Next month
AmortisationTest (AT) passed
Maturity Date of CB upcoming
CBC sufficient funds to redeem CB and Amortisation Test?
Sale of (part) of portfolio possible without deteriorating Amortisation Test
Every 6 months
Every 6 months
Van Lanschot Conditional Pass-Through Covered Bond Programme
Priority of payments
Annex III – Covered Bond Programme
Available Funds
(c) Pro rata amounts due and payable to Paying Agents and Calculation Agent
(d) Pro rata and pari passu, amounts due and payable to Servicer, Administrator, CBC Account Bank, Directors and Asset Monitor
(e) Amounts due and payable to Portfolio Swap Counterparty (if applicable)
(g) Any sums required to replenish the Reserve Account
(h) Pro rata and pari passu, amounts of all Scheduled Principal
(i) Deposit the remaining moneys in the CBC Account
(a) Fees due and payable to Security Trustee
(j) Amounts to and payable to the relevant Swap Counterparty (if applicable)
(k) Amounts due to the Transferor and the Asset Monitor
(l) Interest due on the Subordinated Loan
(m) Principal due on the Subordinated Loan
(n) Deferred Purchase Price Instalment
(f) i – Pro rata and pari passu, amounts to Swap Counterparty (if applicable) ii – All Scheduled Interest
(b) Taxes to any tax authority accrued and unpaid
41Van Lanschot Conditional Pass-Through Covered Bond Programme
Dutch Covered Bond Law
• Since 1 January 2015 the Dutch Financial Supervision Act (Wft) is amended.
• The amendments to the Wft strengthen the Covered Bond legal framework and bring it in line with recent developments in legislation in other countries.
• The amendments aim to increase transparency and protection for investors
• Main amendments:
• Dutch issuers are now obliged by law to be UCITS 52.4 as well as CRR 129 compliant
• Dutch issuers are obligated to be compliant with the EBA best practices (report July 2014)
• Required legal OC of 105%. Banks are not allowed to count ‘cash’ (deposits with themselves) as collateral
• Legal basis for liquidity buffer
• More extensive and proportional sanctions regime
• Additional safeguards recourse of covered bondholders
• Recourse can not be limited by other transactions that rank equally or higher, unless they have been entered into in the interest of covered
bondholders
• Law reiterates importance of CBC not being owned / controlled by the issuer in any way
• More detailed rules for valuation of assets fully CRR 129 compliant
• Detailed investor reporting requirements that go beyond CRR 129.7
• Post-default safeguards
• Manager of owner of cover assets is a licensed trust office that falls under supervision of DNB
• External accountant (Dutch version of asset monitor): continued involvement after issuer default
• Continued supervision by DNB
• Changes in jurisdiction, type of cover asset and cash flow structure are allowed during life of transaction
• Healthy balance sheet ratio
42
Annex III – Covered Bond Programme
Amendments to the Dutch Financial Supervision Act
Van Lanschot Conditional Pass-Through Covered Bond Programme
Programme comparison
43
Annex III – Covered Bond Programme
Van Lanschot NIBC ABN AMRO ING SNS
Issuer F. Van Lanschot Bankiers N.V. NIBC Bank N.V. ABN AMRO Bank N.V. ING Bank N.V. SNS Bank N.V.
GuarantorVan Lanschot Covered Bond Company
NIBC Conditional Pass-Through Covered Bond Company
ABN AMRO Covered Bond Company
ING Covered Bond Company SNS Covered Bond Company
Issuer Rating (LT) (Fitch/Moody’s/S&P)
A-/NR/BBB+ BBB-/Baa3/BBB- A+/A2/A A+/A2/A BBB+/Baa2/BBB
Programme Ratings (Fitch/Moody’s/S&P)
AAA/NR/AAA AAA/NR/AAA AAA/Aaa/AAA AAA/Aaa/AAA AA+/Aa2/NR
Collateral Type Prime Residential Dutch Mortgages Prime Residential Dutch MortgagesPrime Residential Dutch Mortgages
Prime Residential Dutch Mortgages
Prime Residential Dutch Mortgages
LTV Cut-Off (ACT) 80% 80% 80% 80% 80%
Asset Percentage 90% (at issuance) 91% (at 17-03-2015) 75.1% (at 16-03-2015) 77.3% (at 20-02-2015) 75% (at 25-02-2015)
Total Return Swap Provider N/A N/A ABN AMRO Bank N.V. ING Bank N.V.SNS Bank N.V. (plus stand-by guarantee or similar)
Repayment Type Conditional pass-through Conditional pass-through Hard bullet/Soft bullet Hard bullet** Soft bullet
Repayment Risk Conditional pass-through Conditional pass-through Pre-maturity testExtendable maturity – pre-maturity test
Extendable maturity - 12 months
UCITS Compliant Yes Yes Yes Yes Yes
DNB UCITS Registration Yes Yes Yes Yes Yes
CRD Compliant Yes Yes Yes Yes Yes
Indexed ValuationKadaster, 90% increase 100% decrease
Kadaster, 90% increase 100% decrease
Kadaster, 85% increase 100% decrease
Kadaster, 90% increase 100% decrease
Kadaster, 100% increase 100% decrease
Van Lanschot Conditional Pass-Through Covered Bond Programme
** This is the € 35bn Hard Bullet Programme
Annex IV – Dutch economy and housing market
44
Dutch economy
45
Annex IV – Dutch economy and housing market
• In 2014, real GDP in the Netherlands grew by an estimated 0.75% compared to the previous year, largely thanks to exports. In 2015 real GDP growth is
expected to increase by 1.5%
• The fall in the value of the Euro positively influences export growth. Rising demand for goods and services, coupled with lower production costs for
businesses that use oil as a raw material, will also potentially lead to higher growth in business investments
• The slowly recovering labour market stabilised by the end of 2014 in spite of improving employment opportunities, caused by an increasing labour
force. Unemployment is however expected to continue its cautious downward trend in 2015
• Consumer confidence improved during the first half of 2014, but fell back somewhat in the second half of 2014 due to the Ukraine/Russia crisis, the
currency crisis in Russia and substantial fluctuations on the stock markets. Although real disposable household income has increased, total private
consumptions remained the same in 2014
• The EUR 10 year swap rate continues to decline and currently hovers at a new all time low
2
3
4
5
6
7
8
7300
7700
8100
8500
8900
9300
05 06 07 08 09 10 11 12 13 14
Unemployment (r) Employment (l) Labour force (l)
# of persons x1000 % labour forceSeasonally adjusted
0
1
2
3
4
5
6 %
Unemployment Eurozone 10y swap interest rate
Van Lanschot Conditional Pass-Through Covered Bond Programme
House price developments
46
Annex IV – Dutch economy and housing market
• The Dutch housing market bottomed out both in terms of prices and sales numbers in 2013. In 2014 prices of existing homes (PBK-index) recorded an
average annual rise of 0.9% for the first time since the crisis
• Seasonally adjusted house prices rose by 0.4% from the third to the fourth quarter of 2014. Compared to the same quarter of 2013, this rise was 2.1%
• The increase in sales prices differ amongst house types and regions, with the less expensive segment (such as apartments or mid-terrace houses)
growing faster than the luxury segment (detached houses), and urban areas housing prices outpacing the more peripheral areas
• Despite the recent increase in sales prices, housing prices are still approximately 27% below the 2008 peak in real terms. Prices of detached houses
have declined considerably more than prices of houses in the less expensive segments
-4
-3
-2
-1
0
1
2
3
4
-10,0
-7,5
-5,0
-2,5
0,0
2,5
5,0
7,5
10,0
03 04 05 06 07 08 09 10 11 12 13 14 15
Quarter-on-quarter (rhs) Year-on-year (lhs)
% %
100
150
200
250
300
350
100
150
200
250
300
350
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
all houses mid-terrace housesend-of-terrace semi detacheddetached apartment
Index, 1995=100
Price development (Y-o-y / Q-o-q) Price development per segment
Van Lanschot Conditional Pass-Through Covered Bond Programme
Transaction and supply developments
47
Annex IV – Dutch economy and housing market
• In 2014 153,000 homes changed ownership, a rise of more than 40% compared to 2013. This was the highest number of house sales in a single year
since 2008
• December 2014 recorded the highest number of transactions ever in a single month, as buyers were still able to benefit from the relaxation of the gift
tax exemption and less stringent LTV and Nibud standards until 31 December 2014
• The supply of owner-occupied homes fell only slightly in 2014 despite the strong increase in sales. This modest fall in supply and the rise in sales
numbers is expected to tip the market in favour of the sellers
• Economic recovery, high consumer confidence, falling mortgage interest rates and the substantial number of new homes are expected to drive house
sales and compensate for the negative factors, such as ending or scaling back stimulus measures, the negative equity problem and credit-restricting
measures
0
50
100
150
200
250
0
10
20
30
40
50
60
70
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Quarterly transactions (l) Annual transactions (r)
x 1000 x 1000
0
50
100
150
200
250
0
50
100
150
200
250
09 10 11 12 13 14
Owner-occupied houses for sale
xx
x 1000 x 1000
Quarterly and annual transactions House supply (seasonally corrected)
Van Lanschot Conditional Pass-Through Covered Bond Programme
Dutch residential mortgage market
48
Annex IV – Dutch economy and housing market
• Total outstanding mortgage debt in the Netherlands declined slightly in 2014, from EUR 632 bn in 2013 to EUR 630 bn by Q3 2014. Q4 2014 is expected
to show a further decline of mortgage debt due to the maximum tax exemption on gifts that was applicable until 31 December 2014. The prevailing low
saving deposit rates also continues to have a positive effect on prepayments
• With house sales picking up, mortgage issuance has also risen with EUR 12 bn new home mortgage loans in Q4 2014 (48% increase y-o-y)
• The maximum amount that can be borrowed has been reduced from 1 January 2015 onwards based on maximum LTV (104% to 103%) and more
stringent standards for maximum debt-to-income limits (Nibud). As of 1 July 2015, the amount covered by NHG guarantee will be reduced to EUR
245,000. In the coming years the maximum LTV and the NHG ceiling are to be lowered further
• Although these measures restrict the issuance of new credits, mortgage rates are at a historic low (prompted in part by ECB’s QE), improving
affordability of owner-occupied houses. Average mortgage rates in 2015 are expected to be lower compared to 2014
0
100
200
300
400
500
600
700
0
100
200
300
400
500
600
700
06 07 08 09 10 11 12 13 14
Financial institutions SPVs Pension funds
Insurance companies Investors
x € bn x € bn
0
1
2
3
4
5
6
7
0
1
2
3
4
5
6
7
03 04 05 06 07 08 09 10 11 12 13 14
< 1 year 1 - 5 year 5 - 10 year > 10 year
% %
Mortgage debt outstanding Average mortgage rates
Van Lanschot Conditional Pass-Through Covered Bond Programme
Mortgage foreclosures and losses
49
Annex IV – Dutch economy and housing market
• After a few years of increasing mortgages that have fallen into arrears, we have seen a stabilisation of arrears in 2014 (with 60 days+ arrears close to
1%)
• The trend of declining public auctions that has been present in 2012 and 2013 (despite rising payment arrears) also continued in 2014. This drop
should not be seen as an improvement of payment problems, but as a sign that banks supervise home-owners who have fallen into arrears more
closely
• The Netherlands continues to perform well in terms of the level of payment arrears and forced sales as compared to other European countries
0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
4,50
04 05 06 07 08 09 10 11 12 13 14
%
Netherlands UK Spain Italy Portugal
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
0
500
1000
1500
2000
2500
3000
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
12-months-total (lhs) as a percentage of all transactions (rhs)
#
Payment arrears (60+ days) Foreclosures
Van Lanschot Conditional Pass-Through Covered Bond Programme
Annex V – Van Lanschot
50
Key figures 2014 annual results
51
€ million 2014 2013 ∆
Commission 240.3 234.8
Interest 213.7 213.9
Other income 93.0 81.1
Income from operating activities 547.0 529.8 3%
Operating expenses 381.7 374.9
One-off gains* 60.3 -8.0
Gross result after one-off gains 225.6 146.9 54%
Gross result before tax of non-strategic investments 3.4 0.2
Additions to loan loss provision 76.0 102.4
Other impairments 19.5 7.3
Operating profit before tax 133.5 37.4 257%
Income tax 24.8 3.9
Net result 108.7 33.5 224%
Net result excluding one-off pension gain 54.2 33.5 62%
Efficiency ratio (%) 69.8% 70.8%
* Including an one-off gain following the pension scheme change
Annex V – Van Lanschot
Van Lanschot Conditional Pass-Through Covered Bond Programme
Annex V – Van Lanschot
Our core activities cooperate in many ways and benefit from the strong fundamentals of the group
52
Private
Banking
Asset
Management
Merchant
Banking
Investment beliefs
Asset allocation
Manager selection
Discretionary management
Product development
Structured products
Order execution
Selective order execution
Sector focus
Strong balance sheet and rating. 403-guarantee. Management book.
Diversification of income. Cooperation IT/OPS. Talent exchange.
Van Lanschot Conditional Pass-Through Covered Bond Programme
2015: the year of growth
• Disciplined execution of wealth management strategy on the basis of professionalism, integrity,
discretion and hard work
• Full focus on core activities aimed at the preservation and creation of wealth for private and
institutional clients
• Private Banking: focus op wealth planning advisory service, investment services, mortgages and
improvement of omnichannel client experience
• Asset Management: capitalise on promising, increasingly international pipeline and realise
outperformance in social responsible investing
• Merchant Banking: focus on selected niches, exploit synergies between product groups and
continue international expansion
• Further increase cost awareness: increase effectiveness and efficiency to achieve sustainable growth
and our long term goals
Annex V – Van Lanschot
53Van Lanschot Conditional Pass-Through Covered Bond Programme
Van Lanschot is listed on the Amsterdam stock exchange and has a stable shareholder base
• Van Lanschot’s issued share capital consists of
ordinary shares A which are held by Stichting
Administratiekantoor van gewone aandelen A
Van Lanschot (the Stichting)
• The Stichting has issued depositary receipts
for these shares. The depositary receipts are
listed on Euronext Amsterdam
• The graph shows the holdings of depositary
receipts that have been included in the
Substantial Holdings register of the
Netherlands Authority for the Financial
Markets
54
Annex V – Van Lanschot
Ordinary shares & depositary receipts Holders of depositary receipts
30%
12%
12%10%
10%
8%
18%Delta Lloyd
Rabobank
APG
Wellington
LDDM Holding
SNS Reaal
Free float
Van Lanschot Conditional Pass-Through Covered Bond Programme
Van Lanschot is a statutory board company
55
Annex V – Van Lanschot
Karl Guha (1964)
Chairman
Background: CRO at UniCredit Banking Group
Constant Korthout (1962)
Chief Financial Officer/Chief Risk Officer
Background: 18 years at Robeco Group, since 2002 as CFO
Arjan Huisman (1971)
Chief Operations Officer
Background: Partner with Boston Consulting Group
Richard Bruens (1967)
Private Banking
Background:Management team ABN AMRO Private Banking International
Van Lanschot Conditional Pass-Through Covered Bond Programme
Annex VI – Contact information
56
Contact information
57
Annex VI – Contact information
+31 20 354 49 50
+31 20 348 97 01
+31 20 348 97 13
+31 20 348 97 14
Willem van Oosten
Director Treasury
+31 20 348 97 15
Ralf van Betteraij
Head of Term Funding
Iryna Snihir
Term Funding
Tosca Holtland
Term Funding
Wendy Winkelhuijzen
Manager Investor RelationsConstant Korthout
CFRO
+31 20 354 49 50
Van Lanschot Conditional Pass-Through Covered Bond Programme
Annex VII – Glossary
58
• ABS Asset Backed Securities• ACT Asset Cover Test• AT Amortisation Test• BKR Bureau Krediet Registratie (Credit
Registration Office)• CBC Covered Bond Company• CBPP3 Covered Bond Purchase Programme 3• CLTIFV Current Loan to Indexed Foreclosure Value• CLTIMV Current Loan to Indexed Market Value• CLTOMV Current Loan to Original Market Value• CLTOFV Current Loan to Original Foreclosure Value• CPR Constant Prepayment Rate • CPT Conditional Pass-Through• CPTCB Conditional Pass-Through Covered Bond
Programme• CRD Capital Requirements Directive• DACB Dutch Association of Covered Bond Issuers • DNB Dutch Central Bank• DSA Dutch Securitisation Association • ECB European Central Bank• ECBC European Covered Bond Council• EVA Anti-Fraud System
Annex VII – Glossary
59
• HNWIs High Net Worth Individuals• LCR Liquidity Coverage Ratio• LT Long Term• LTFV Loan to Foreclosure Value• LTV Loan To Value• MTN Medium Term Notes• NHG Nederlandse Hypotheek Garantie (National
guarantee system for the Mortgage Market)• Nibud Nationaal Instituut voor budgetvoorlichting
(National Institute for guidelines, prescriptions and education regarding financial planning)
• NTT National Transparency Template • OC Overcollateralisation• PCS Prime Collateralised Securities• PwC PriceWaterhouseCoopers• RMBS Residential Mortgage-Backed Security • SFH Anti-Fraud System• UCITS Undertakings for Collective Investment in
Transferable Securities• VIS Identification System